Business conduct - G1

Impact, risks and opportunity management

In the context of business conduct, careless or non-compliant actions can lead to a considerable financial impact through legal action and fines imposed. It may also become necessary to roll out additional training and internal measures, causing additional costs and organisational pressure. Negative media coverage also risks serious reputational damage, impacting the trust that our customers, partners and investors place in us.

Objectives

Hydratec aims to have zero confirmed cases of corruption and bribery.

Policy

Hydratec operates and trades worldwide, so employees have to deal with differences in laws, regulations and interests, but also in ways of conducting themselves and working. Hydratec is aware of its obligation to act with integrity. Corruption and bribery have been identified as a material financial risk to Hydratec. When corruption and bribery incidents occur, Hydratec may be faced with consequences such as fines and reputational damage. It is therefore important to reduce this risk to a minimum. Culture plays an important role in this, as our company culture is shaped by clearly defined core values, which are communicated to all employees. These values are enshrined in the ESG Policy and Code of Conduct (the “Code”), which employees and management alike are committed to and must adhere to. The Code covers the key rules that must all follow to prevent corruption and bribery.

Hydratec’s leadership plays a crucial role in promoting these values. The Supervisory Board and the Management Board endorse the principles of good corporate governance and the provisions set out in the Dutch Corporate Governance Code. Employee engagement is promoted through regular consultation with the Works Councils in each operating company. The Group Management Board takes part in this once a year. In addition, our corporate culture is continuously evaluated through surveys and feedback, sharing results with the Works Council and employees. Actions for improvement, such as better internal communications, are implemented based on this feedback.

With regard to preventing and addressing unlawful behaviour, Hydratec has clear mechanisms for internal and external reporting and investigating suspicions and concerns. These mechanisms are laid down in the whistleblower scheme and the Code, which describe the situations that can be reported and the procedures and channels through which reports can be made. Depending on the nature of the report, specific reporting routes and investigation procedures have been set up.

Hydratec offers whistleblowers protection in accordance with applicable laws and regulations and ensures that reports can be made without fear of harm or reprisal. Hydratec ensures that internal and external stakeholders are informed about our whistleblower scheme by communicating openly about it and making it publicly available. In addition, there is no specific training, but all employees who may receive whistleblowing reports will be instructed on this. Our incident investigation procedure is founded on independence and objectivity. Based on the nature of the incident, the incident is assessed and will be further investigated. Regular training is also provided on business conduct, including ethics, compliance and risk management for functions that have been identified, with a high risk of corruption. Policies on corruption and bribery have also been developed, in line with the United Nations Convention against Corruption, and further action is taken where necessary to mitigate risk. This relates in particular to the sales process, in which agents are used.

Hydratec complies with the legislation on the protection of whistleblowers and provides the necessary training and information for employees on reporting concerns and whistleblower protection.

Actions

In 2025, actions are formulated on responsible business conduct. The purpose of these actions is to achieve our responsible business conduct targets and to prevent, mitigate and, where possible, remediate negative impacts. In formulating these actions, the potential impact is identified as well as the significant financial resources associated with implementing these actions. These resources are subdivided into operating expenses and capital expenditure.

At Hydratec, preventing, detecting and investigating corruption and bribery is critical. This strengthens stakeholder confidence by providing transparency on internal procedures and control measures. Any incidents are promptly investigated in an independent and objective manner by an internal or external committee. The results of these investigations are reported to the designated bodies, with follow-up and feedback in accordance with the applicable policy and whistleblower scheme.

To support compliance and awareness, training programmes and onboarding processes are laid down, with a specific focus on roles with an elevated risk profile. All employees endorse the Code of Conduct. In addition, the board and management are informed every year about the policy and any updates, so that they can adequately fulfil their responsibility for compliance and enforcement. This approach promotes a culture of integrity and helps to mitigate integrity risks.

The policy and Code of Conduct are actively communicated and made accessible, including through the website. This ensures all stakeholders are clearly informed about the applicable standards and expectations, and encourages formal confirmation of compliance.

Metrics

Confirmed incidents of corruption or bribery

The information below provides insight into incidents of corruption or bribery that have occurred during the reporting period. No specific actions in addition to those identified in the section above have been taken to address violations of anti-corruption and anti-bribery procedures and standards.

Progress

With regard to the ESG goal on integrity and anti-corruption, no reports of corruption or bribery were confirmed in both the current reporting period and the previous year. The absence of incidents indicates that the existing policies and established procedures are working effectively. This puts the organisation on track to maintain and anchor this ESG goal, with continued focus on compliance and awareness within the organisation.

The management report as referred to in Part 9 of Book 2 of the Dutch Civil Code monitors the elements from the foreword to the historical summary inclusive. This version of the annual financial reporting of Hydratec Industries N.V. for the financial year ending on 31 December 2025 is not presented in the ESEF format as specified in the regulatory technical standards for ESEF (Delegated Regulation (EU) 2019/815). The set of ESEF reports can be downloaded at the download page.